CAMPING DIVISION

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					Camping Division

Matthew Cheetham

17 September 2004

Camping Division

Background
• Original and to date largest part of the Group • Two market leading brands (Eurocamp and Keycamp) in core business of pre-sited camping • Other brands (Easycamp, Perfect Places) selling non committed accommodation

• On 200+ high quality camp-sites in mainland Europe
• Sales offices in UK, Ireland, Holland, Germany, Denmark and Switzerland • Full service tour operations • Mid to upper income, family customer base:

Our Customers = Our Sales Force
• Self-catering with a difference • Friendly and informed but secure environment • Camp-site leisure amenities • Freedom, independence and flexibility • France, Spain and Italy as holiday destinations • Mainly families but couples too

• Value for money

Breakdown of Sales (2003)
Revenues by market
Ireland Others 6%
5%

Revenues by brand
Other 8%

Germany
9%

UK

Keycamp

Eurocamp

Holland
17%

62%

37%

55%

Complex business with high barriers to entry
• Own tents and mobiles but not campsites

• Annual contracts with sites for emplacements
• High breakeven point • Above average profit margins • Multi brand, multi country, multi-distribution channel requiring complex yield management • 1,000 permanent employees supported by 2,000 temporary staff in high season • Summer only business

Historical Trends – Capacity
Units
20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2000 2001 2002 2003 2004 2005

-11%
Tents

Mobile homes

Historical Trends – Occupancy
Nights per unit 96

94 92 90 88 86 84 82 80 78 76

2000

2001

2002

2003

2004

Operating Profit 2000-2003
PBIT* (£m)
20 18 16 14 12 10 8 6 4 2 0
% figures show EBIT margin

16.6%

17.2%

17.4%

14.6%

2000

2001

2002

2003

*Operating profit before goodwill amortisation, impairment and exceptional costs

Travel Consumers
• More frequent, shorter holidays

• Book closer to departure date
• Increasingly self package holidays • Increase in activity holidays • Book holidays in different ways i.e. increasing use of internet

Travel Industry Trends
• No frills and full service airlines lowering prices and flying to many regional destinations in Western Europe • Traditional above the line advertising less cost effective • Consumers booking on-line and through call-centres rather than high street • Internet increasingly important distribution channel • White label emerging as important channel

Market – Camping Sector (1)
• Tour operator market mature as supply constrained by parcs increasingly selling capacity into their own accommodation. • Demand/pricing under pressure from unbranded, no frills site-owned competition. Growing market for customers to book direct with campsites. Currently little uptake in the UK but increasingly important in mainland Europe. • Overall target market reducing in size due to changing demographics. • Competition – new entrants full service and low cost

Market – Camping Sector (2)
• Penetration within target audience at around 2% gives considerable upside demand potential • High operational leverage • High margins • Defensible competitive advantage (emplacements and branding)

Holidaybreak Camping
• Declining profitability

• Too much capacity in some areas
• High cost base

• Organisational structure unwieldy
• Need for greater brand differentiation

• Opportunities in emerging distribution channels i.e. Internet

Strategy – Holidaybreak Camping
• Develop/evolve brand strategy for Eurocamp, Keycamp, Easycamp, e brands and white label

•

Easycamp
– Low margins – No operational or financial risk i.e. no commitments – Potential opportunity to create a distribution brand

•

Fly camping product challenges (transfers, bed linen, towels) to be resolved

Strategy – Holidaybreak Camping (2)
• Up weight e-commerce resource • Centralise IT, HR, DTP and pricing to either reduce costs or be more effective • Homogenize European marketing and selling prices • Reduce overheads • Restructure to be more effective

Organisation & Management

Camping Division Managing Director Matthew Cheetham*

Operations Director Steve Whitfield (20)

Finance Director Wendy Pritchard (2)

Eurocamp Brand Director Deborah Beckett*

Keycamp Brand Director Robin Parry*

IT Manager Steve Howell (8)
Finance Commercial

Head of HR Tricia Walker (15)

(Years with business in brackets) * Joined 2004

• Restructured and streamlined • Upweighted resource in I.T.

• Promoted #2 in Germany • Creating Commercial function

• New Sales and Marketing Directors (Sept. ’04) for Eurocamp and Keycamp

Plan for 2005
• Reduce fixed costs in line with capacity • Target early sales

• Maintain premium brand pricing and positioning
• Launch tactical brands • Broaden distribution i.e. market extension, white label

• Enhance product design
• Customers flying to destinations – product development • Preview sales +15% up on 2004

• Capacity held on quality sites but overall -11%
• Poor UK summer weather gives cause for optimism!

Challenges in Medium Term
• Increase low season occupancy • Mobile home fleet • Brand differentiation and positioning • Back office systems consolidation • Product development • Product awareness • Changing distribution mix

Summary
• Great holiday choice for many families • Attractive margins and investment returns • Control own accommodation portfolio • Market leading brands • Need to reverse profits decline – (early booking indicators encouraging)

• Travel sector trends provide opportunity


				
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